Watch out for the next big economic bubble, China

Ultimately, China's economic facade probably will crack. And, when it does, the consequences may be disastrous. Any decline in foreign investment could depress growth. Rising unemployment could lead to social chaos. (The number of labor protests quadrupled between 1993 and 1999.) Nicholas R. Lardy, a China specialist at the Brookings Institution, predicts that the rising burden of non-performing loans could make the country's entire banking system insolvent by 2008. This banking crisis could lead to millions of Chinese trying to withdraw their life savings from banks, followed by panic when they realize the banks are insolvent and have no backing for their deposits, and potentially massive social turmoil.